Labonte Limited had 38,400 common shares outstanding on January 1, 2020

Accounting Aug 17, 2020

Labonte Limited had 38,400 common shares outstanding on January 1, 2020. On March 1, 2020, Labonte issued 21,600 shares in exchange for equipment. On July 1, Labonte repurchased and cancelled 9,600 shares.
Calculate the weighted average number of shares outstanding for Labonte for the year ended December 31, 2020.

Expert Solution

Computation of the weighted average number of shares:-

Exiting shares as on January 1, 2020 = 38,400 * 12 / 12

= 38,400 shares

Equivalent units of shares Issued on March 1, 2020 = 21,600 * 10 / 12

= 18,000 shares

Equivalent units of shares repurchased and cancelled on July 1, 2020 = 9,600 * 6 / 12

= 4,800 shares

Weighted average number of shares = Exiting shares as on January 1, 2020 + Equivalent units of shares Issued on March 1, 2020 - Equivalent units of shares repurchased and cancelled on July 1, 2020

= 38,400 + 18,000 - 4,800

= 51,600 shares

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